What is the ERR for this project? Assume that   = 12% and MARR = 20% per year.  Is this project considered to be profitable? What is the simple payback period?

Q: pected to generate fixed annual cashflows for 4 years beginning in 3 years from today. If the…

A: Present value is the equivalent value of the future cash flow today based on timing and interest…

Q: A security that costs $89.90 will provide a return of 6.5 percent per year. If you want to keep the…

A: PV=today cost=$89.90FV=Future value=$143.80Interest rate=r=6.5%Required to find out the period…

Q: Question: There are Two paybacks 1) Payback period X =  6 years and 2) Payback period Y =5 years…

A: Payback PeriodIt indicates the time period under which the initial investment or initial outlay is…

Q: Your firm has a risk-free investment opportunity with an initial investment of $250,000 today and…

A: Present value = $250,000Future value = $266,000Number of years = 1

Q: Suppose you invest $3,000 today and receive $10,000 in 25 years. a. What is the internal rate of…

A: IRRIt is a capital budgeting technique of a discounted cash flow that gives a rate of return is that…

Q: You have an investment opportunity that requires an initial investment of $5,500 today and will pay…

A: The acronym IRR stands for internal rate of return. It shows the actual return wherein the present…

Q: You have an investment opportunity that requires an initial investment of $3,600 today and will pay…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: You invest in a project that is expected to generate fixed annual cashflows for 4 years beginning in…

A: The movement of funds into and out of a financial system or firm over a predetermined length of time…

Q: A project has two possible outcomes. The good outcome returns $8,000 next year and occurs 88% of the…

A:

Q: A project that provides annual cash flows of $17,300 for nine years costs $78,000 today. 1. Is this…

A: Capital budgeting refers to a technique used for evaluating the viability of the project by…

Q: If an investment project costs a firm £200 and yields a stream of profits of £100 per year for the…

A: Internal rate of return(IRR) is one of the techniques of capital budgeting that take into…

Q: If the IRR of a project is 10% will the MIRR be more or will it be less than 10%?

A: MIRR = [(Future Value of positive cashflows / PV of negative Cashflows)^(1/years) ]- 1

Q: Consider a project with a 15 year time horizon (T=14). Suppose that in the first two years, the…

A: Time Period is 15 years(T=14) Project cost at t=0 is $175 and t=1 is $150 Net benefits at t=2 is $40…

Q: What is the approximate maximum amount that a firm should consider paying for a project that will…

A: Discounting and compounding are the two concepts used in the time value of money to determine the…

Q: Consider a project which costs £100 in year zero and yields a return of £15 per year starting from…

A: NPV is the difference between present value of all inflow and initial investment NPV =PV of all…

Q: You have been offered a unique investment opportunity. If you invest $8,800 today, you will receive…

A: Net Present Value is the present value of cash inflows less the initial investment. If NPV is…

Q: You have been offered a unique investment opportunity. If you invest ​$11,600 today, you will…

A: The computation is shown in excel table below: The formula used above is shown below:  Working…

Q: Suppose you have an investment offer that guarantees an average investment gain of $1,000 per year.…

A: The average rate of change describes the rate at which one quantity changes in relation to another.…

Q: Suppose you buy a machine and you have the option of paying the full price, $40,000, now; or $10,000…

A: Here, Option -1 is paying $40,000 now Option -2 is Paying 10,000 each at the each of the next five…

Q: You have been offered a unique investment opportunity. If you invest $9,500 today, you will receive…

A: Given: Initial investment = $9,500 Cash in flow in year 1 = $475 Cash in flow in year 2 = $1,425…

Q: Consider the Following 10-year project: Year Cash Flow 0 -30000 1 2500…

A: Net present value (NPV):The net present value is a technique used for making the investment…

Q: A project requires an initial investment of I>0 and yields an annual amount x>0 in perpetuity…

A: Net present value is the difference between the present value of inflows and present value of…

Q: If PV=$100, i=2%, n=5 years, and the investment compounds annually, what is the equation for Future…

A: Given Information: Present Value (PV) : $ 100 Rate (i) : 2 % Time Period (n) : 5 years

Q: You are looking at an investment that will pay you $22,995 in year 2, $43,270 in year 4 and $41,525…

A: The present worth of the investment will include the discounted value of all single payment which…

Q: Suppose you have to choose between two mutually exclusive investment projects with the following…

A: SummaryProject A: NPV = $81.86 (in $1,000's), IRR = 23.32%, Payback Period = 2 yearsProject B: NPV =…

Q: You are considering an investment opportunity that requires an initial investment of $148 million in…

A: IRR is an important capital budgeting tool. IRR is that rate at which NPV (net present value) is…

Q: You have been offered a unique investment opportunity. If you invest $9,400 today, you will receive…

A: NPV = sum of all PVs. PV = cash flow in a year * PVIF where PVIF is the present value interest…

Q: For each of the following scenarios, state whether an incremental investment analysis is required to…

A: The minimum acceptable rate of return (MARR), also known as the hurdle rate is the basis of…

Q: Explain how the internal rate of return and net present value are related. If a project has an NPV…

A: In this question, we are required to determine how IRR and NPV are related and what is the IRR.

Q: A project has a 0.68 chance of doubling your investment in a year and a 0.32 chance of halving your…

A: The standard deviation measures how spread the returns are. The probabilities of different returns…

Q: Suppose that there are two alternatives as project I with initial cost of 50.000 TL. and project II…

A: MARR=10% incremental return =4% PROJECT 1 MARR=10% PROJECT 2 MARR=10+4=14% initial cost=50000…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.